Universal and YouTube working on premium music site

March 5, 2009

Universal and YouTube working on premium music site
Music giant Universal is reportedly close to a deal with YouTube to set up a subscription Web site. It appears YouTube will be providing technology rather than acting as a financial partner.

Descriptions of the deal include terms such as ‘advanced’ and ‘fluid’. That combination of code words usually means the two sides are serious about the deal, but the final arrangement is still open to substantial change.

As it stands, the deal would apparently involve a premium web site (working name Vevo) featuring music videos plus other band-related content such as interviews. The theory is that such a site could attract advertising from major firms who are currently wary about having their products appear on YouTube for fear of being associated with user-generated clips which are, shall we say, lower rent.

YouTube would provide the technology for the streaming video, but likely won’t be a formal partner in the venture. There’s no word on whether YouTube would get a flat fee or a share of profits.

It’s also not clear if YouTube would be required to remove Universal produced videos from its site so that the premium site could offer genuinely exclusive content. If that happened, YouTube might also have to crack down particularly heavily on unauthorized uploads of clips of Universal artists.

Universal currently runs the most viewed channel on YouTube with its clips viewed a total of 3.5 billion times. It reports receiving revenue payments in the ‘tens of millions’ from the site last year.

The talks come as record companies continue attempts to renegotiate licensing deals signed with YouTube between two and three years ago. The New York Times says music groups believe those deals, which pay a fee per video watched plus a cut of ad revenue, are no longer sufficient. However, only Sony has succeeded in reaching a revised deal.

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